Amid the sturm und drang over IRS tomfoolery (I needn’t say “alleged” here, because in the best of times, the US tax code is steeped in tomfoolery), folks are missing a huge opportunity: Let’s just scrap whole darn thing. This isn’t a left-right issue. This is a statement of fact: America’s tax code is a 70,000-plus page Byzantine mess. Is it any wonder that, through history, politicians have found myriad ways to use the IRS to settle scores and silence enemies? (Whether or not that’s what’s happened just recently.) 

Shiller says people don’t want to commute long distances because of relatively high gasoline prices and in the current “ideas economy,” many want to live in close proximity to others. There are also demographic shifts: aging baby boomers who no longer enjoy working on the upkeep of their homes and the increase in single-person households. When asked where this all leaves the housing market 10 years from now, Shiller says home prices will be “about where they are now” after adjusting for inflation.

 
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Let's call it the Twitter Skitter. When the market briefly skidded after a hacked AP Twitter account reported explosions at the White House , we saw the first real-time demonstration of robo-trading riding on the back of social media. The plunge in the market was so quick that it obviously was not the result of individuals reading the phony news and deciding what action to take. Computers were making the trades—or, more precisely, ending the trades. "It's not so much that the computers initiated trades. What happened is that they canceled the orders, so the bids come out of the market. That causes a crash," a person at an algorithmic trading firm explained.

The federal government insures the private pensions of 43 million Americans—shielding their retirements from the fallout of a bankrupt employer, or a labor union investment portfolio that goes belly up. Since 1974, the Pension Benefit Guaranty Corporation has secured the incomes of more than 1.5 million retirees. It manages more than $76 billion— a portfolio funded by the premiums paid by thousands of pension plan sponsors. But the PBGC is stuck hemorrhaging cash and desperately needs to be fixed, even though Congress overhauled its premium structure last summer. It has an accumulated net deficit of $34 billion. Among its structural problems, the agency has been unable to charge sufficiently high premiums that would offset the cost of unfunded pensions from going under.

As May rolls around you’re bound to hear an endless number of pundits and market participants discussing the “sell in May” phenomenon.  CXO Advisory has an excellent data analysis of the sell in May theory.  In short, buy and hold beats “sell in May”.  So maybe we can all move past this silly seasonal pattern that adds little value to portfolios and seems to be nothing more than a regurgitated media story.

Even as the housing market improves, Americans seem more willing to embrace renting as an alternative to homeownership, a new survey on housing attitudes from the MacArthur Foundation finds. Many Americans still say they have a strong desire to own their own home, but the overall appeal of renting compared with owning is changing, the survey found. Fifty-seven percent of adults believe that “buying has become less appealing,” and 54 percent believe that “renting has become more appealing” than it was before. And nearly half of current homeowners (45 percent) say they can see themselves renting at some point in the future.

Like Lehman Brothers before it, Cyprus may well come to be seen not so much as the cause of further crisis but as yet another symptom of the ‘long emergency’ that continues to suffocate the western economies. We would describe this emergency as, fundamentally, an inevitable crisis triggered by an unsustainable explosion of credit; western banks and western governments are now like Macbeth’s “…two spent swimmers, that do cling together / And choke their art.”

After six years of waiting on the sidelines, newly eager home buyers across the country are discovering that there are not enough houses for sale to accommodate the recent flush of demand. The housing turnaround seems to have caught almost everyone in the business by surprise. As desirable as the long-awaited improvement may be, the unusually low level of homes for sale is creating widespread problems for buyers and sellers alike, leading to bidding wars and bubblelike price jumps in places that not long ago were suffering from major declines.

Hurricane Sandy claimed many victims. Will the New York Stock Exchange’s floor traders be among them? The Big Board doesn’t like to close , even for the worst natural disaster to hit its hometown in recent memory, one that destroyed the certificates nominally traded on its floor even if didn’t flood NYSE’s own basement . So it’s drawing up plans to avoid having to during the next catastrophe . And that plan doesn’t involve open-outcry trading. If course, NYSE says it will never give up its two-century-plus old system. But it will be making those floor traders potentially redundant. And it’s never good to be the last of any legacy business.

Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management.  Faber is the manager of Cambria’s Global Tactical ETF (GTAA), separate accounts and private investment funds for accredited investors.  Mr. Faber is also the co-founder of AlphaClone, an investing research website, the author of the World Beta blog, and the co-author of The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets.   He is a frequent speaker and writer on investment strategies and has been featured in Barron’s, The New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology.  He is a Chartered Alternative Investment Analyst (CAIA), and Chartered Market Technician (CMT).

Rodney Johnson is the President of HS Dent, an independent economic research company focused on how people spend money as they go through predictable stages of life, and how that spending drives our economy. Using this approach, HS Dent has been able to accurately forecast economic changes for two decades. As President of HS Dent, Mr. Johnson contributes to the research and writings of HS Dent, oversees the research staff, the publication of materials, and the day-to-day operations of the company.

America’s coffee cup seems filled to the rim. Hot or iced, drip, French press, espresso, Chemex or Keurig, each of us downs about 23 gallons of joe a year on average. It’s in our blood. It’s also on our streets, where Starbucks outposts outnumber hospitals and colleges. And even on our resumes: 161,000 people list “coffee” as a skill on LinkedIn. But the truth is, our cup is half empty. We could be drinking a lot more coffee and, in fact, we used to. In 1946, when America’s thirst for coffee peaked, each of us swallowed about 48 gallons a year on average, according to the U.S. Department of Agriculture — more than twice current consumption.

US finance chiefs beware: accountancy’s answer to RoboCop will soon be watching you. The Securities and Exchange Commission is deploying an innovative computerized tool designed to automatically trigger alerts concerning suspicious accounting at publicly traded companies. The regulator plans to roll out the early warning system this year, saying it will mine a “rich vein of information” continuously supplied by companies through official filings such as annual reports.

In its ongoing effort to prevent refund fraud, the IRS launched a nationwide crackdown on identity thieves last month. The "massive national sweep" nabbed 389 identity theft suspects in 32 states, and resulted in 734 enforcement actions -- including 109 arrests and 189 indictments, the IRS announced Thursday. Check cashers are also being investigated. The IRS said it is visiting 197 of these businesses to ensure they're not helping people get away with identity theft or refund fraud. IRS acting commissioner Steven Miller said he hopes these actions will send a message that the agency is serious about identity theft, which is "one of the biggest challenges facing the IRS today."

If you're planning to work past age 65, you may find that you have a surprising amount of company among your peers. A larger chunk of Americans are working into their late 60s and even beyond, part of a long-term trend that has continued despite the tight job market of the past five years and is expected to increase in coming decades. "It's one of the most important changes in the labor force over the last generation," said Robert Johnson, director of The Urban Institute's Program on Retirement Policy.

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This trend has been in place since the financial crisis, but the fact that it is accelerating is extremely disconcerting.  First off, this is not the kind of behavior that should be witnessed in an “economic recovery.”  Second, we need to remember the huge percentage of Americans on food stamps and/or disability, many of them also have jobs.  So essentially, a wage and a check from the government is still not enough to survive.  They still need to tap into a loan from their 401k plans.

This trend has been in place since the financial crisis, but the fact that it is accelerating is extremely disconcerting.  First off, this is not the kind of behavior that should be witnessed in an “economic recovery.”  Second, we need to remember the huge percentage of Americans on food stamps and/or disability, many of them also have jobs.  So essentially, a wage and a check from the government is still not enough to survive.  They still need to tap into a loan from their 401k plans.

2012 was a groundbreaking year for the exchange traded fund industry. Assets under management grew 27% from 2011, to $1.3 trillion. About $188 billion in new inflows were received by U.S.-listed ETFs. “Exchange-traded fund flows reached a record $191 billion in 2012, surpassing the $169 billion flow in 2008. Unlike that year, which was dominated by strong flows into U.S. stock ETFs, 2012 saw record flows into international, fixed-income, and sector stock ETFs. Flows were pushed past the record by a strong showing of $37.7 billion in flows for the month of December,” Michael Rawson wrote for Morningstar.

  
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The American taxpayers stand to lose billions as General Motors today announced a plan to buy back 40 percent of the company owned by the federal government. "The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock's closing price on Tuesday," the Detriot News reports. However, the break even price — the price that GM would need to pay for each share in order to pay back the money the government put in to the company —was $53 a share. That number has now risen dramatically.

I worked on Wall Street for twenty five years. This blog is my take on the financial issues of the day. I was an FX trader during the early days of the 'snake' and the EMS. Derivatives on currencies were new then. I was part of that. That was with Citi. Later I worked for Drexel and got to understand a bit about balance sheet structure and corporate bonds from Mike Milken. I was involved with a Macro hedge fund later. That worked out all right, but it is not an easy road. There was one tough week and I thought, "Maybe I should do something else for a year or two." That was fifteen years ago. I love the markets. How they weave together. For twenty five years I woke up thinking, "What am I going to do today to make some money in the market". I don't do that any longer. But I miss it.   

The Internal Revenue Service has released new rules for investment income taxes on capital gains and dividends earned by high-income individuals that passed Congress as part of the 2010 healthcare reform law. The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income. The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.

General Motors Co (GM.N ) and its Chinese joint-venture partners said on Wednesday they plan to build a $1 billion auto assembly plant in the city of Chongqing as the GM group bids to remain the leader in the world's largest auto market. The plant in southwestern China will have annual production capacity of 400,000 vehicles, but the partners did not disclose what vehicles will be built there. It also will have the capacity to build 400,000 engines annually, a GM spokesman said.

The discussion of American manufacturing is often a muddled one, steeped in nostalgia for a bygone era and accompanied by a certain misty-eyed conviction that it is a sector in ceaseless decline. A new study from the McKinsey Global Institute published Monday morning adds some welcome clarity. In 184 pages, the in-house think tank of the global consulting giant presents a picture of manufacturing as among the most dynamic sectors of the U.S. and global economies, driving higher productivity and standards of living. But it also shows that what we usually think of as a traditional manufacturing job isn’t coming back.

The investment industry could learn a lot from physicians. Today, if you have an investment question, you are most likely going to get long discredited pseudo babble from an “advisor” that may not have had an investment theory class in his/her entire career. The investment world’s equivalent of the Hippocratic Oath would be a fiduciary pledge, but not one wire house employee could sign one. It seems reasonable to require an investment “advisor” to act solely in the client’s best interest, but this quaint notion hasn’t ever caught on Wall Street.

The Bank of England halted expansion of its bond-buying program as officials shifted focus to stimulating bank lending to support a recovery that remains lackluster. BOE Deputy Governors Paul Tucker and Charles Bean both suggested in recent speeches that asset purchases may no longer have the same impact on the economy as when first introduced in 2009. At the same time, Martin Weale has questioned whether loosening policy is right with inflation above the central bank’s 2 percent target.

Isn't this just an overreaction, a correspondent asks?  In this modern age, why can't they just operate the trading floor remotely? The answer is that the NYSE considered it, and rejected the idea.  The members weren't comfortable with the possibility that there would be glitches in the electronic system (as has happened before).  "Glitches", in the context of international finance, can mean "millions of dollars lost and a huge pain in the ass for everyone as trades have to be unwound".  And given the problems with the subway system, there was no way that they could operate the physical floor.

U.S. household debt has finally fallen back to pre-recession levels. So, we’ve finally learned our lesson about spending more than we make, right? Well, not really. The real reason our debt has dipped is that so many Americans defaulted on bills they couldn’t pay.

Federal Reserve officials have been worried that their policy of ultra-low interest rates may be having less of an effect than usual because of a “broken transmission channel.” In plain English, this means the money hasn’t really been flowing smoothly from liquidity-flooded banks to would-be borrowers. Economists at TD Securities argue banks have passed on less than half of their lower funding rates as reflected in yields on mortgage-backed securities onto consumers.

Seven years ago, refinancing wasn’t about saving on monthly payments; it was about pulling cash out. Homeowners extracted close to a trillion dollars collectively in home equity in 2005 and largely put it toward home remodeling, swimming pools, cars, vacations and retail spending. Today, 81 percent of homeowners refinancing their first-lien mortgages either kept the same loan amount or lowered their principal balance by paying-in additional money at closing, according to Freddie Mac.

Nearly 90 percent of Americans would face higher taxes next year if Congress lets the nation hurtle over the “fiscal cliff,” the year-end precipice of tax hikes and spending cuts that threatens to throw the nation back into recession. A study published Monday by the nonpartisan Tax Policy Center finds that taxes would go up by a collective $536 billion next year, or about $3,500 per household, reducing after-tax income by more than 6 percent — an “unprecedented tax increase.”

Sunday will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. Personal income tax rates will rise on January 1, 2013.  The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

Sales of previously owned homes and work on single-family projects climbed in August to the highest levels in two years, signaling the residential real-estate market is contributing to the U.S. economic recovery. Purchases of existing houses increased 7.8 percent to a 4.82 million annual rate, the most since May 2010, figures from the National Association of Realtors showed today in Washington. The median forecast of 78 economists surveyed by Bloomberg called for sales to increase to a 4.56 million pace. Commerce Department data showed builders began work on the most one- family homes since April 2010.

The Fed just changed the game. Whereas in the past, the Fed always set a defined amount of Fed purchases, this time they're saying that the easing will continue until morale improves. This is a major change. They've now said to businesses and banks and everyone else that they will not let up and tighten conditions until things are much better.

The national unemployment rate dropped to 8.1 per cent, down from 8.2 per cent, but this was only because so many people gave up looking for work. If the participation rate had not dropped so precipitously, unemployment would have risen to 8.4 per cent. Factory employment fell by the most in two years and temporary-help companies eliminated positions for the first time in five months. The 69.9 per cent labor force participation rate for men is at lowest level recorded since the US government began tracking it in 1948.

Every week, there’s a new volley of articles proclaiming that retail investors have withdrawn, pulled, yanked, dumped, ditched, unloaded or bailed out of another few billion dollars’ worth of U.S. stock mutual funds. You’d be forgiven if the image that came to your mind was tens of millions of terrified lemmings shrieking and toppling off a cliff edge into the sea. (Lemmings don’t even do that, but it’s hard to keep that picture out of your head.) So far this year, net redemptions from U.S. stock mutual funds have totaled roughly $68 billion. If that isn’t a lemming death march, what is? Read on.

Facebook at half-price: which way now?

If you bought Facebook shares in the May IPO and held onto them, by Monday morning you would have lost more than half your investment -- and not see any encouraging signs of making your money back.

The Post Office said last week that it lost an astounding $5.2 billion in the last three months. And like every other poorly run company it is asking for Congress’ help. The Post Office is using the same blackmail tactic everyone else does: jobs are at stake. Sorry, PO, but fix your most glaring problem first. The stamps we put on envelopes are easily counterfeited, as are the money orders issued at the Post Office. When your two main businesses are so vulnerable to thieves, how can you possibly make money?

We're all familiar with the post-WWII breeding frenzy that birthed the term "Baby Boomer." But as the recession sent birth rates in the U.S. plummeting, chances of another boom have seemed pretty unlikely––until now, CNN Money's Annalyn Censky reports: "When you ask women 'how many children do you want to have over your lifetime', that hasn't changed much despite this big downturn in the economy," said Samuel Sturgeon, president of Demographic Intelligence, a firm that forecasts birth rates for clients like Disney, Fisher-Price, Gerber and Procter & Gamble. Meanwhile, the number of women entering their childbearing years is surging. This segment of the population fell all through the 1990s, but is now back at an all-time high and continuing to rise. Called the "Echo Boom," these women are the children of the Baby Boomers and fall between the ages of 20 and 35 -- the years considered "prime childbearing age" by the government." The question now isn't whether a boom is happening. It's when.

Wednesday morning's stock snafu had a familiar ring to it — mysterious volume in trades that simply could not have been made by a human comes surging out of nowhere, causing brief but acute market mayhem. By now, many players on trading floors have gotten used to the disruptions that can come from the highly automated new world of high-frequency trading. But that doesn't mean they like it.

United Parcel Service Inc. (UPS) predicted the U.S. economy will grow 1 percent in the rest of 2012 as slowing volume growth prompted the world’s largest package- delivery company to conclude average forecasts are too high. The projection by UPS, an economic bellwether because it moves goods from financial documents to pharmaceuticals, contrasts with a 2.2 percent growth rate predicted by economists in a Bloomberg survey. “Right now, the estimates are a little too optimistic,” Chief Financial Officer Kurt Kuehn said in a telephone interview. “We’re not trying to ring the alarm bell, but we do think that there’s probably a little more likelihood that the numbers will turn lower than estimates.”

The aftermath of the 2008 financial crisis showed just how vulnerable state budgets are to economic swings. The major loss of revenue from income, sales and property taxes, combined with pressing Medicaid and pension obligations, created a major fiscal crunch. States responded to the fiscal crisis by slashing government jobs and services, as well as passing temporary tax increases. They also received a temporary boost from the 2009 federal stimulus. But many also resorted to budget gimmicks, accounting sleights of hand and one-shot fixes to close the gap. In a new report, a group of budget experts explains that such measures are merely masking—and sometimes even exacerbating—the fiscal crises that states will continue to face even after the overall economy comes back.

The next time the Fed unleashes quantitative easing, maybe we'll finally wake up to the fact the Fed is not just powerless, it is actively destructive. The Fed is promising once again to pound nails with the only tools in its toolbox, a saw and a chisel. The "nails" the Fed is trying to pound down are unemployment and deflation. Needless to say, whacking these big nails with a handsaw and a chisel is completely useless: they can't get the job done. The Fed claims all sorts of supernatural powers to sink nails at will--"unconventional monetary policy," quantitative easing, money dropped from helicopters and so on. But all it really has are two tools which have no positive effect on unemployment or the real economy.

The private sector added just 84,000 jobs in June, a big miss from some projections that had it topping 100,000 for the month. More than 25,000 of those jobs came in temporary "help services" positions. Overall, private-sector hiring is down both sequentially and from the year-ago period. Last month, the private sector added 105,000 positions, including revisions upward this month. And in June 2011, the private sector added 102,000 jobs.

Now that President Obama's health care overhaul has won the last stamp of approval from the U.S. Supreme court, the question you're probably asking is, Who's going to pay for it? Much of the cost burden will be shouldered by the health care industry and employers that provide workers with insurance. On an individual consumer level, however, it'll be the wealthiest Americans who feel the sting of Obamacare––and, strangely enough, people who hit the tanning bed.

Americans' net worth collapsed in recent years, but don't blame the housing market for it all. A CNNMoney analysis of new Census Bureau data shows that if you strip out the effects of the housing collapse, median household net worth still fell by 25% between 2005 and 2010. The decline was driven largely by the plummeting stock market, which devastated Americans' portfolios and retirement accounts. Overall, median household net worth declined 35% to $66,740 in 2010. The median worth of stock and mutual fund portfolios fell 33%, while the median home equity value dropped 28%.

Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger election on Sunday that many fear will result in the country being forced out of the euro. Bankers said up to 800 million euros ($1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election.

Spain's sovereign debt rating was slashed three steps Thursday by credit rating agency Fitch, which warned that the nation is at risk of being downgraded into junk bond status. The nation's debt rating was cut from "A" all the way to "BBB," the lowest rating that is considered investment grade. And the new rating was given a negative outlook, meaning it at risk for further downgrades. Fitch pointed to the estimated cost of a Spanish bank bailout, which it said is likely to cost between €60 billion to €100 billion, as well as a prolonged recession that Fitch now expects to run throughout 2013.

U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up. The dismal jobs data will fan fears that the economy is sputtering. It could also damage President Barack Obama's re-election prospects. And it could lead the Federal Reserve to take further steps to help the economy. The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent from 8.1 percent in April, the first increase in 11 months.

U.S. Securities and Exchange Commission investigators have concluded their probe of possible financial fraud at Lehman Brothers Holdings Inc. without recommending enforcement action against the firm or its former executives, according to an excerpt of an internal agency memo. Lawmakers and investors have pressed the agency for more than three years to determine whether Lehman misrepresented its financial health before filing the biggest bankruptcy in U.S. history in September 2008.

Commodities guru Jim Rogers said he is not buying gold. In fact, he said he has "hedged himself" since we spoke to him last month. Rogers said he expects gold prices to fall further and believes they could tumble 40-50 percent off their top if India were to stop its gold imports or if Europeans were to sell their gold: "There's some movement in India to really curtail the purchase of gold. Some people in India say we should stop importing gold period which would be draconian. There are also Europeans who are talking about the need to sell their gold or at least to start offering gold backed-convertible bonds, bonds convertible into gold, which would be a way to free up their central bank holdings without dumping gold.

Any way you slice or dice it, the April jobs report was terrible—and terribly disappointing. Employers added just 115,000 workers to their payrolls last month, way below the 180,000 Wall Street economists were expecting. Hiring has now slowed in three straight months. Job growth in March and April averaged 135,000, down from an average 252,000 per month in the three months to February.

 Nearly one Spaniard in four is unemployed, according to data released on Friday, as the country’s economic and financial predicament prompted a government minister to talk of a “crisis of enormous proportions”.The data from the National Statistics Institute showed 367,000 people lost their jobs in the first three months of the year. At this pace, Spanish job losses are equivalent to 1 million per month in the United States. That means more than 5.6m Spaniards or 24.4 per cent of the workforce are unemployed, close to a record high set in 1994.

Update: The author of this blog post, Kenneth W. Gronbach will join us on the show this Saturday.

Generation Y is an interesting study in contrasts and should prove to be an exciting management challenge in a corporate environment. But before we can explore this incredible idiosyncratic generation let’s review a few of the demographic givens. Remember that Generation Y was born in the twenty years between 1985 and 2004 and is currently eight to twenty-seven years old.  Generation Y is a nice bell shaped curve with its peak in 1990 when about 4.2 million live births occurred in the United States. Generation Y is actually bigger than the Baby Boomer Generation born 1945 to 1964 by over one million. It will easily rival the Boomer Generation in consumption and influence.

Generation Y is an interesting study in contrasts and should prove to be an exciting management challenge in a corporate environment. But before we can explore this incredible idiosyncratic generation let’s review a few of the demographic givens. Remember that Generation Y was born in the twenty years between 1985 and 2004 and is currently eight to twenty-seven years old.  Generation Y is a nice bell shaped curve with its peak in 1990 when about 4.2 million live births occurred in the United States. Generation Y is actually bigger than the Baby Boomer Generation born 1945 to 1964 by over one million. It will easily rival the Boomer Generation in consumption and influence.

It’s one of the biggest mysteries on Wall Street. How can stocks be in their fourth year of a bull market and trading activity be so low? “There’s no way to sugar-coat it: Volumes are down and trending lower,” wrote Ana Avramovic of Credit Suisse, in a note to clients. “A growing preference for other asset classes may be drawing money away from equities.”

 Inquiring minds keep poking around at problems in Spain and everywhere one looks problems are far greater than government officials would like you to believe. The Minister of Finance and Public Administration, Critobal Montoro, has submitted to Congress the 2012 State Budget there are huge numbers that are involve pensions, unemployment and interest. 37.1% of total state budget will be allocated to pension payments, 9.2 % for unemployment benefits , while another 10.5% will go to interest payments (28.848 million euros, equivalent to 2.7% of GDP. In all, these three items account for 56.8% of total State Budget 2012.

A devastating report from the Federal Housing Finance Agency's Office of Inspector General says it now appears "highly unlikely – if not mathematically impossible – for the Enterprises to buy themselves out of the conservatorships." The FHFA was created to act as conservator of the two government sponsored enterprises in 2008 when the housing market collapse.

The new iPad, which was released on March 16th, is the most popular version of the tablet yet. Apple sold 3m of them in just four days. But some buyers took to discussion forums to report that it has a tendency to heat up. A similar debate exists about Apple’s stock. The company’s share price has risen by 83% in the past year, and by almost 50% so far in 2012. Apple is now easily the largest company in the world by market capitalisation, at some $565 billion. It looms over Exxon Mobil, which is worth a mere $408 billion. Since the start of this year it has added $187 billion to its valuation, roughly equivalent to the entire market caps of companies like Procter & Gamble, Johnson & Johnson and Wells Fargo. Apple is larger than the American retail sector combined.

How would you feel if you worked for a state or local government for 20 or 30 years only to have your pension slashed dramatically or taken away entirely?  Well, this exact scenario is playing out from coast to coast and in the years ahead millions of elderly Americans are going to be affected by broken promises and vanishing pensions. 

Greece may have negotiated the biggest sovereign debt restructuring in history but early prices on new bonds to be issued to creditors showed investors had little faith that the deal would mean an end to Athens' economic nightmare. Under the deal, private creditors swap old Greek bonds for new ones with a much lower face value, lower interest rates and longer maturities, losing about 74 percent on the value of their investments and slicing 100 billion euros off the national debt.

General Electric Co. said in a 10-K filed Friday that its principal pension plans had an unfunded liability of $18.4 billion as of Dec. 31, more than double the $7.1 billion reported a year earlier. GE reported that of the $8.5 billion in higher pension liability, roughly $6.8 billion was due to a change in the discount rate used to determine current funding status.

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger. Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

Raise a glass of beer in a German bar and the chances are it was made just down the road to a simple, ancient formula. German banking works in much the same way, rooted in local communities and structured in a way that discourages aggressive international expansion, innovation and complexity. Local banks dominate savings and loans in Europe's largest economy. There are hundreds of small players, which by their very existence help limit the economic fallout from bank failures and makes sure banks do not get 'too big to fail.'

U.S. lenders including Bank of America Corp. still face years of litigation and billions of dollars in liabilities tied to the housing collapse after agreeing to settle a probe of abusive foreclosure practices. Government officials can pursue claims related to the packaging of loans into securities, criminal-enforcement actions and fair-lending violations, U.S. Attorney General Eric Holder said yesterday. The $25 billion deal with the five biggest servicers ends state and federal probes into shoddy foreclosures and pays for debt forgiveness, refinancing and other efforts to keep struggling homeowners in their properties.

While first day jumps in IPOs make for great TV and everyone is anxiously awaiting their allocation to the 'greatest IPO of all time' this week, we thought it might be useful to look at some of the larger and more recent tech IPOs to get some perspective on how close to the moon we will get when Facebook is released.

It may not be a household word, but the battle over your broker's "fiduciary" role has moved in a new direction -- away, some say, from a lot of clients' best interests. A major push by consumer advocates to hold stockbrokers to the same client-comes-first standard of care required of investment advisers -- the so-called fiduciary standard -- seemed close to success only a year ago. The five SEC commissioners, however, never voted to change the rules. Now, the SEC is saying it won't write any new rules until it studies how much they might cost the industry.

President Barack Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under an August deal with lawmakers that averted a U.S. default. The president’s notification to congressional leaders starts a 15-day countdown for lawmakers to consider and vote on a joint resolution disapproving of the increase.

Without a hard deadline, there is nothing that can force change upon a system already in motion, no matter how self-destructive. Unfortunately, the clock in Europe is ticking as a deadline approaches, and somewhat poetically, the place where it all started is where it may end. In March Greece faces a redemption cliff: if by then the €130 billion promised to it by the Troika as per the July 21 second bailout, is not delivered, it is game over.

The major U.S. stock indexes may not have gotten very far in 2011—the Dow Jones Industrial Average is up 6.2% for the year and the Standard & Poor's 500 stock-index is up less than 1% —but there was plenty to keep investors interested all year long. Geopolitical upheaval, natural disasters, sovereign-debt crises and credit-rating downgrades competed for the market's attention. These forces whipped stocks around to a degree not seen since the financial crisis three years ago.

European banks borrowed enough cash from the European Central Bank at its first three-year offering to refinance almost two-thirds of the debt they have maturing next year amid concern that markets will remain frozen. The 523 euro-area lenders took a record 489 billion euros ($638 billion) from the Frankfurt-based central bank in 1,134- day loans today, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. That equals about 63 percent of the European bank debt maturing in 2012, according to Goldman Sachs Group Inc. analysts.

The Securities and Exchange Commission today charged six former top executives of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) with securities fraud, alleging they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

European leaders’ blueprint for a closer fiscal union to save their single currency left the onus on central bankers to address investor concerns that Italy and Spain would succumb to the two-year-old financial crisis. On the 20th anniversary of the Maastricht summit that created the euro and 19 months since leaders forged their first plan to contain the debt turmoil, leaders added 200 billion euros ($267 billion) to their warchest and tightened rules to curb future debts. They sped the start of a 500 billion-euro rescue fund to next year and diluted a demand that bondholders shoulder losses in rescues.

Standard & Poor’s on Tuesday cut its credit ratings for many of the world’s largest banks, including Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC). The move follows S&P’s shift, announced earlier this month, in the methods it uses for rating the banks. Citigroup, Goldman Sachs and Bank of America Corp. each had their long-term credit rating downgraded a single notch to A- from A. Similar cuts were applied to JPMorgan Chase (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC) and Morgan Stanley (NYSE: MS).

Claims for unemployment benefits dropped to the lowest level in seven months and housing starts exceeded forecasts, signaling improvement in the weakest areas of the U.S. economy. Applications for jobless benefits decreased 5,000 in the week ended Nov. 12 to 388,000, Labor Department figures showed today in Washington. Starts decreased 0.3 percent to a 628,000 annual rate in October, according to the Commerce Department. The median estimate of economists surveyed by Bloomberg News called for a drop to 610,000. Building permits, a proxy for future construction, jumped 10.9 percent.

Claims for unemployment benefits dropped to the lowest level in seven months and housing starts exceeded forecasts, signaling improvement in the weakest areas of the U.S. economy. Applications for jobless benefits decreased 5,000 in the week ended Nov. 12 to 388,000, Labor Department figures showed today in Washington. Starts decreased 0.3 percent to a 628,000 annual rate in October, according to the Commerce Department. The median estimate of economists surveyed by Bloomberg News called for a drop to 610,000. Building permits, a proxy for future construction, jumped 10.9 percent.

Elaine Floyd, CFP®, is director of retirement and life planning for Horsesmouth, a New-York based company that provides information and support to financial advisors. She is the author of Savvy Social Security Planning for Boomers, a comprehensive package designed to assist financial advisors in helping baby boomers integrate Social Security into their overall retirement plan.

WASHINGTON (AP) — Government-controlled mortgage giant Freddie Mac has requested $6 billion in additional aid after posting a wider loss in the third quarter. Freddie Mac said Thursday that it lost $6 billion, or $1.86 per share, in the July-September quarter. That compares with a loss of $4.1 billion, or $1.25 a share, in the same quarter of 2010. This quarter's $6 billion request from taxpayers is the largest since April 2010.

European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area. The 17-nation euro and stocks climbed while bond spreads narrowed after leaders emerged early today from a 10-hour summit in Brussels armed with a plan they said points the way out of the quagmire, albeit with some details still to be ironed out.

Bank of America did something quite tricky and extremely devious last month: it shifted anywhere up to the total of $53 trillion of the total derivatives it held as of June 30 on its books at Q2 from the Holding Company, which was downgraded last by Moody's from A2 to Baa1 (the third-lowest investment grade rating) to its retail bank, which was downgraded to the far more palatable A2 (from Aa3). The reason for the transfer? Bank customers who were uneasy with the fact that suddenly the collateral backstoping the operating entity handling their counterparty risk was downgraded to just above junk, demanded that said counterparty risk be mitigated by the bank's $1 trillon in deposits, peoples deposits.

U.S. retail sales rose more than expected in September as Americans spent more on cars, clothing and fuel, an indication that consumers remain willing to shop despite high unemployment and a weak recovery.Retail and food services sales climbed 1.1% from the previous month to an adjusted $395.47 billion, the Commerce Department said Friday. Economists surveyed by Dow Jones Newswires had forecast a 0.8% increase.

Payrolls climbed by 103,000 after a revised 57,000 increase the prior month, Labor Department data showed today in Washington. The median forecast in a Bloomberg News survey called for a rise of 60,000. The gain reflected the return to work of 45,000 telecommunications employees. The jobless rate held at 9.1 percent. Hours and earnings increased

For instance? Investing, where modern portfolio theory is not very different in the way we apply it than it was when Dwight Eisenhower occupied the White House. How is that possible? Unlike Harry Markowitz when he was writing his seminal research, advisors today live in the Information Age. We know things Markowitz only suspected: that during normal markets, correlations among assets tend to move around unpredictably within a surprisingly tight spectrum of numbers, and then behave very differently whenever investors are paralyzed with fear or excited. Interestingly, the same is true about measures of investment volatility.

No doubt in reaction to the significant weakening of the economy over the past several months, the Federal Reserve acted as expected and announced what's known as "Operation Twist" (OT). The goal of this program, first instituted in 1961 and indeed named after the dance popular at the time, is to lengthen the average maturity of the Fed's balance sheet. The result, ostensibly, will be to lower longer-term borrowing rates, including mortgage rates. 

America's poverty rate clicked up again last year and now stands at its highest level since the early 1990s. But what exactly does it mean to live in poverty in one of the richest countries on earth?In many parts of the world, poverty means starvation. But in the U.S., the standard is far more elusive. Currently, it is defined as having income below $22,314 for a family of four. But that only includes pretax income, and therefore it neglects a number of programs—such as food stamps, the Earned Income Tax Credit and subsidized housing—that form the backbone of the nation's antipoverty efforts.

"We're on the way to a worldwide financial dictatorship governed by bankers," said Peter Gauweiler, German Bundestags Representative, in an interview  published Monday in the Welt Online. "We don't support Greece," he said. "We support 25 or 30 worldwide investment banks and their insane activities." 

This, just as Wolfgang Schäuble, Finance Minister, has been dealt a defeat of sorts by his own governing coalition during the trial vote for the expansion of the current European Financial Stability Facility (EFSF) whose purpose it is to bail out an ever lager circle of debt-sinner countries. 25 members of his coalition voted against it or abstained. The actual vote is scheduled for September 29.

Citigroup Inc. and Bank of America Corp. were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits. By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

On Saturday, August 20th, Don will interview C. Thomas Howard, Ph.D. from the University of Denver and founder of Athena Invest regarding the continuing research discounting a 60 year-old theory of money management.

The financially strapped U.S. Postal Service is proposing to cut its workforce by 20 percent and to withdraw from the federal health and retirement plans because it believes it could provide benefits at a lower cost. The layoffs would be achieved in part by breaking labor agreements, a proposal that drew swift fire from postal unions. The plan would require congressional approval but, if successful, could be precedent-setting, with possible ripple effects throughout government

There will be plenty of hyperbole inspired by Thursday's market elsewhere, we will offer instead a few (hopefully objective) observations regarding where the August 4th 500 point drop in the Dow ranks relative to some of the others drubbings in market history. For the record, the S&P fell 4.78% on Thursday, while the Dow very nearly kept pace with its own decline of 4.31%.

NEW YORK -- Amid the contentious debt ceiling debate, the United States is at risk of being booted out of a prestigious group of countries that boast a spotless credit rating. Only 17 countries in the world -- currently including the U.S. -- hold the highly coveted triple-A rating from both Standard & Poor's and Moody's. (S&P rates an additional three countries as triple-A, that aren't featured on Moody's list). Germany, Canada, France, Norway, Sweden and Switzerland are among those with the undisputed stamp of approval -- so is the Isle of Man, a country off Ireland's east coast, and Singapore. Now, S&P and Moody's are questioning the United States' membership in this exclusive club.

BRUSSELS—Euro-zone leaders agreed Thursday on a new €109 billion ($157 billion) bailout for Greece and new steps to prevent its debt crisis from metastasizing across the Continent—in a plan expected to trigger the first debt default by a nation using the common currency. The meeting also produced a stark and open-ended declaration: The wider euro zone is committed to financing countries that take bailouts—thus far, Greece, Ireland and Portugal—for as long as it takes them to regain access to private lenders. Still, it remains to be seen whether the tourniquet will hold. Even after the new plan, Greece will have a staggering load of debt.

Buffeted by high taxes, strict regulations and uncertain state budgets, a growing number of California companies are seeking friendlier business environments outside of the Golden State. And governors around the country, smelling blood in the water, have stepped up their courtship of California companies. Officials in states like Florida, Texas, Arizona and Utah are telling California firms how business-friendly they are in comparison

As retirement nears, many boomers are coming face to face with the fact that their nest egg might not provide them with enough income to last through retirement. In fact, more than 40% of baby boomers are at risk of not even having enough retirement income to pay for basic retirement expenses like uninsured health-care costs, according to a 2010 study by the Employee Benefit Research Institute. And in looking at this situation, it seems clear that whatever we’re doing to save for retirement just isn’t cutting it. 

US companies are buying back their own stock at the fastest pace since 2007, a trend that is helping maintain the resilience of the broad market. Strong company balance sheets, a shortage of profitable investment opportunities and low interest rates are helping drive the latest surge instock buy-backs. On Tuesday, Best Buy, the vast consumer electronics retailer, was the latest company to announce plans to buy back its stock with a $5bn share repurchase plan.

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday. Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

A surprise OPEC meeting result has sent oil surging and left everyone guessing what's the cause of the dissent on the usually consistent board. First, today's new was not a complete surprise. Saudi Arabia, the group's most powerful member, wanted to raise production, but others prior to the meeting signaled that didn't want to. In the end, Iran, Venezuela, and Algeria all said no to increases, according to CNBC.

It's cost $600 billion of your money. And it was supposed to rescue the economy. But has Ben Bernanke's huge financial stimulus package, known as "Quantitative Easing 2," actually worked as planned? QE2 is being wound down in the next few weeks. Fed Chairman Ben Bernanke has said it has left the economy "moving in the right direction."
But an analysis of the real numbers tells a very different story.

“If I can't kill it today, I'm going to stab it enough times that it stumbles out of the room,” Mr. Muralidhar told financial advisers at the Investment Management Consultants Association annual meeting yesterday. Mr. Muralidhar has the cred to make you take notice of such a statement. He's the former head of investment research for the World Bank, a former managing director at J.P. Morgan Investment Management and the head of AlphaEngine Global Investment Solutions LLC, a company he started. An economist trained at the Sloan School of Management at the Massachusetts Institute of Technology, Mr. Muralidhar argues that the foundation of modern investment portfolio theory is doing a disservice to investors.

From Bloomberg: General Motors will invest $109 million in its operations in Flint and Bay City , Mich., to support engine production for current and future fuel-efficient small cars produced for the U.S. market. The investment will protect or add 96 jobs at the two sites.

The number of food stamp recipients was essentially flat in February, the most recent month available, with 44.2 million Americans receiving benefits, according a new report from the U.S. Department of Agriculture. The food stamp program ballooned during the recession as workers lost their jobs or saw their hours and income reduced. The rise in recipients has begun to flatten in recent months, which may mean that as the economy is improving fewer Americans are seeking to join the program. Enrollment in the program is still high though, with 11.6% more people tapping benefits in February than the same month a year earlier.

America's population of centenarians - already the largest in the world - has roughly doubled in the past 20 years to around 72,000 and is projected to at least double again by 2020, perhaps even increase seven-fold, according to the Census Bureau. The Census Bureau estimates there were 71,991 centenarians as of Dec. 1, up from 37,306 two decades earlier. While predicting longevity and population growth is difficult, the census' low-end estimate for 2050 is 265,000 centenarians; its highest projection puts the number at 4.2 million.

U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression. Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things. But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times.

Gone are the plans to golf, garden or read on a creaky porch swing. Almost 40% of working Americans said they will never afford retirement, according to a report released Wednesday by the American Institute of Certified Public Accountants. Retirement ranked as the most important issue out of all financial concerns facing Americans, including uninsured medical expenses and rising education costs. In fact, it topped the list for the second year in a row, the survey said.

It’s not uncommon for money-management experts to have conflicting points of view. What’s hard though is squaring up those opposing opinions and trying to figure out what to do with your own money given conflicting theories. Case in point: The latest missives from two legendary investors, Rob Arnott and Bill Gross. The former argues against stocks for the long-term and the latter argues against bonds, or at least U.S. Treasurys. Arnott, the chairman of Research Affiliates, examined in his latest newsletter the equity risk premium in the U.S. since 1802 and argued that “concentrating the majority of one’s investment portfolio in one investment category (i.e. stocks), based on an unknowable and fickle long-term equity premium, is a dangerous game of ‘probability chicken.’”

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

Federal Reserve Governor Elizabeth A. Duke said Thursday in a speech to the Virginia Association of Economists "Among the pre-retirement age group, those who gained and those who lost wealth during the financial crisis generally appear to act as if they had lost wealth – in that there are signs of delayed retirement and greater desire to save and to avoid risk.

It is no surprise that the average family's balance sheet declined between 2007 and 2009 or that the loss of wealth results in changed behavior. A study by the Federal Reserve, "Surveying the Aftermanth of the Storm," reveals the average household portfolio fell from $18,500 to $12,000 - more than a third. In addition, home values declined and debt levels increased.

TOKYO - Japan's devastating earthquake and deepening nuclear crisis could result in losses of up to $200 billion for the world's third largest economy. The disaster is expected to hit Japanese output sharply over the coming months, but economists warned it could result in a deeper slowdown if power shortages prove significant and prolonged, delaying or even scotching the "v-shaped" recovery that followed the 1995 Kobe earthquake. Most believe the direct economic hit will total between 10-16 trillion yen ($125-$200 billion), resulting in a contraction in second quarter gross domestic product (GDP) but a sharp rebound in the latter half of 2011 as reconstruction investment boosts growth.

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement. Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

"Unemployment, as measured by Gallup without seasonal adjustment, hit 10.3% in February -- up from 9.8% at the end of January. The U.S. unemployment rate is now essentially the same as the 10.4% at the end of February 2010." And the one indicator that nobody in the mainstream media will touch with a ten foot pole: "Underemployment, a measure that combines part-time workers wanting full-time work with those who are unemployed, surged in February to 19.9%.

NEW YORK -- Just when the U.S. economy seemed to be getting its footing, a number of new obstacles risk tripping it up. A spike in oil prices due to spreading unrest in the Middle East is the highest profile problem, but not the only one. Economists are also worried about the push to cut government spending, the end of stimulus from the Federal Reserve and the bull market in stocks running its course. While none of these factors might be enough to tip the economy back into a recession individually, "pile up enough headwinds and you're going backwards," said David Wyss, chief economist with Standard & Poor's.

 JPMorgan Chase & Co. racked up a perfect trading record for the second half of last year, making money every day after accomplishing the same feat in the first three months of the year. Traders at the New York-based bank made an average of $76 million a day last year, down from $84 million in 2009, according to an investor presentation today at the bank’s New York headquarters. The investment bank lost money on eight days last year, all in the second quarter.

Pundits and politicos promote a magical myth: a coming small business hiring boom. That fantasy is completely disconnected from the harsh realities of private enterprise. Regardless of their ideological persuasion, pundits and politicos reliably repeat the mantra that "small business is the engine of jobs growth." The mantra is followed by the pundit-politico's belief that a "small business jobs boom is right around the corner." I have news for the pundits and politicos: ain't gonna happen. Why? The answer cannot be found in the manipulated and massaged Bureau of Labor Statistics numbers (have any real jobs been created, net of jobs lost, in the past year? Who knows?) or in the punditry's Cargo-Cult-like belief in a mythical "small business jobs machine" that they have never experienced and know nothing about.

The Journal of Indexes gives academic treatment to bland investments, and so might not seem a likely source of hot controversy. The latest issue, however, is packed with it–and has greatly annoyed mutual fund titan Vanguard. A report therein gives new support for the claim that most index investors are unknowingly missing out on a large portion of the returns that their passive approach ought to provide.

In an interview with The Wall Street Journal ahead of this week's annual meeting of the World Economic Forum in Davos, Switzerland, Jean-Claude Trichet warned that inflation pressures in the euro zone must be watched closely, and urged central bankers everywhere to ensure that higher energy and food prices don't gain a foothold in the global economy.

Charles Lewis Sizemore - If there is one asset class best avoided in 2011, it’s gold. At the expense of sounding overly dramatic, gold is an investment whose fundamentals are rotting from within, and you do not want to be anywhere near it when the bottom falls out. In late November, I wrote a short piece for Seeking Alpha in which I added a few more jabs at the barbarous relic. For my efforts, I received over 200 comments, most of which were hate mail.

Baby Boomers Could Force Economic Catastrophe Lawmakers will look back on 2011 as the year the U.S. started down into a financial Grand Canyon, because the first baby boomers turn 65 this year -- the front edge of a tidal wave of baby boomer retirements. "Over the next 20 years, around 10,000 baby boomers will be retiring each day," says Andrew Biggs, an analyst at the American Enterprise Institute. "That means more people collecting social security, more people collecting Medicare, more people collecting Medicaid as well."

What goes up must come down. It is natural to assume that the law of gravity should also apply in financial markets. After all, isn’t the oldest piece of investment advice to buy low and sell high? But in 2010 European investors would have prospered by following a different rule. Anyone who bought the best-performing stocks of the previous year would have enjoyed returns more than 12 percentage points higher than someone who bought 2009’s worst performers.

How could that possibly be, when the stock market has largely recovered? (Let's forget for a moment that the stock market rallied after 1929, but then crashed in a double dip). To find out, we'll look at a couple comparisons to get an idea of what is going on in the rest of the economy. And then we'll compare the government's efforts in the 1930s to today. During the Great Depression, home prices fell 25.9 percent in five years. The U.S. housing market is now down around 25 percent from its peak in 2006. As housing price expert Robert Shiller pointed out in September 2008:

When it comes to investing, people tend to prefer home cooking. For decades Americans gorged on U.S. stocks and barely touched foreign ones. There was good reason for that -- U.S. equities were, until recently, more widely traded and less volatile than their international counterparts -- but globalization and the continued downturn at home have given investors more reason to look outside the U.S. for growth.

For years, my wife and I have had an understanding. Clarissa would spend the money, and I would save it. Well, Clarissa is still holding up her end of the bargain, but I'm an abject failure. My company retirement accounts, despite what I thought was a relatively conservative mix, were down close to 35% in early March from the fall of 2007. That, in turn, forced me to do some painful thinking about how much risk I can stomach on my family's behalf, and how much money we can expect to have in retirement.

The longer people stay out of work, the more trouble they have finding new work. That is a fact of life that much of Europe, with its underclass of permanently idle workers, knows all too well. But it is a lesson that the United States seems to be just learning. This country has some of the highest levels of long-term unemployment — out of work longer than six months — it has ever recorded. Meanwhile, job growth has been, and looks to remain, disappointingly slow, as today's government report showed an increase in only 39,000 jobs, far below what was expected.

The euro zone's sovereign debt crisis escalated Friday as the market homed in on Spain as another potential weak spot, leaving officials scrambling to quell investors' fears. Spanish Prime Minister Jose Luis Rodriguez Zapatero moved to dispel the growing anxiety surrounding the country's fiscal position Friday, saying there was "absolutely" no chance the euro zone's fourth-largest economy would seek a bailout from the European Union. But his attempt to calm the markets had little effect, with the euro tumbling and the selloff in Spanish and Portuguese sovereign bonds continuing.

The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict. EU President Herman Van Rompuy (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy the European Union itself. “We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

The Federal Reserve is making a high-stakes bet in the hope of getting the economy steaming along again. Nobody is sure the Fed's best efforts will work, and they may actually backfire. The Fed announced a plan to buy $600 billion in government debt, aimed at driving already low long-term interest rates even lower. The central bank would buy the debt in chunks of $75 billion a month through June of next year. Economists call it "quantitative easing." The latest package gets the name "QE2" - like the ship - because it's the second round. The Fed spent about $1.7 trillion from 2008 to earlier this year to take bonds off the hands of banks and stabilize them.

The government’s most recent auction for Treasury Inflation Protected Securities, or TIPS, received such strong demand on Monday that yields went negative for the first time in the security's history. The auction appears to reflect concerns that inflation -- which has essentially been non-existent since mid-2008 when the financial crisis hit -- could flare up again as the Federal Reserve begins a possible "quantitative easing" strategy in the coming weeks. It's a shift in sentiment in the bond market from only a few weeks ago, when the focus was heavily on the issue of the U.S. economic experiencing deflation similar to Japan. For consumers sitting on the sidelines, traders said the TIPS auction is a sign that inflation is coming – and is already here in the form of higher energy prices and food costs.

The federal bailout for Fannie Mae and Freddie Mac could double in size during the next three years, according to projections from the companies' federal regulator. Fannie and Freddie, the federally controlled mortgage finance giants, will need as much as $215 billion more from taxpayers in the next three years to meet their financial obligations.

Rodney Johnson is one of America’s leading investment strategists and advisors. The foundation of his success is the HS Dent system of forecasting economic change based on demographic trends.

As president of HS Dent Investment Management and HS Dent Publishing, Johnson publishes and writes for HS Dent Forecast newsletter, which is known for its in-depth analyses of change and economic growth affecting the financial markets. He appears regularly in the financial news media where he is valued for his candor and insight into economic and stock market trends. Johnson is the primary instructor for the highly successful HS Dent Demographics School launched in 2006 and attended by executives from around the world.

The foreclosure machinery that has forced millions of Americans out of their homes is beginning to seize up as some lenders and their lawyers are accused of cutting corners in their pursuit of rapid home repossessions. Evictions are expected to slow sharply, housing analysts said, as state and national law enforcement officials shine a light on questionable foreclosure methods revealed by two of the country’s biggest home lenders in the last two weeks.

 Consumer Metrics Institute - During the month and a half from August 1 to September 15, our Weighted Composite Index has improved substantially, rising from recording a year-over-year contraction rate in excess of 9% to recently registering a contraction rate near 3%. This is the largest positive movement that we have seen over half of a quarter since late 2009. The improvement has stopped (at least temporarily) the decline of our 91-day trailing quarter average (our Daily Growth Index).

It has become clear that jobs in some industries may never come back or if they do it will take years or decades for a recovery. The weakness in these sectors will make it harder for the private industry, even aided by the government, to bring down total unemployment  from 9.6% and replace the 8.3 million jobs lost during the recession. The losses in these industries have to be offset by growth in others before there can be any net increase in American employment

The "Great Recession" that began in 2008 has had many nuances, some of which can only be seen in data with higher resolution than that provided by the BEA or NBER. Our day-by-day profile of consumer demand helps us understand triggering events while also making it clear that many recent changes in consumer behavior have begun to linger -- much as the recession itself now appears to have done.

Housing will eventually recover from its great swoon - But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg. The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

Life In The Great Recession - As the Wall Street Journal reported in “From Ordering Steak and Lobster, to Serving It,” (June 2, 2009, page A17), nearly 25,000 jobs have been lost in the financial sector since August 2007 and another 30,000 are expected to be lost through 2011. This is just in New York City. The potential for the bulk of those people to find similar employment in terms of income is extremely limited. The main person profiled in the article lists the changes: His wife has returned to work, they quit dining out, they pulled their daughters out of ballet and tumbling, and they canceled cable TV. They also missed a mortgage payment and fear foreclosure and possibly bankruptcy.

THE Federal National Mortgage Association — known as Fannie Mae — and the Federal Home Loan Mortgage Corporation — Freddie Mac — were poorly structured from the time, 40 years ago, when they were set up as so-called government-sponsored enterprises. Both of these technically private companies, designed to foster the issuance of home mortgages, enjoyed implicit federal backing in the event they got into financial trouble but only weak regulation to prevent such trouble. Essentially, the federal government insured the companies’ liabilities but never charged a premium.

What is risky and what is safe? That has always been a crucial question for anyone working in the financial markets. Bankers provide their clients with an asset mix, tailored to suit the aging widow or the young entrepreneur. But what if everything you know about risk was suddenly turned upside down? In the last two years, all the stuff we thought was really safe and dull turned out to be dangerous. And the things we thought were risky ended up being quite reliable.

FINANCIAL RESEARCHER Lou Harvey, 68, is the founder of Boston's Dalbar, which rates investment firms and fund companies based on customer performance and product quality and service. The important thing for this year's study is that it's the first time we've been able to do a deep analysis of what happened after the 2008 market upheaval. We've been able to look at the effect of those events on investor behavior. What the study shows in the broadest sense is an unwillingness on the part of the investing public to rethink investment principles

The law, named after its principal authors, Connecticut Senator Christopher Dodd and Massachusetts Representative Barney Frank, gives the government new authority to unwind failing financial firms that may threaten the entire system, imposes new rules on derivatives markets and creates a consumer-protection agency at the Federal Reserve to monitor everything from home loans to credit cards. The Treasury Department and other officials now begin writing the regulations that will give the framework for enforcing the law, a process that may take a year.

The Labor Department reported that consumer prices fell 0.1 percent in June, down for the third straight month, paced by further declines in energy prices. On a year-over-year basis, the government’s measure of annual inflation fell from 2.0 percent in May to just 1.1 percent in June, the lowest level since last October when the price index first pushed back into positive territory after almost a year of negative numbers.

 The US stock market has now become a concentrated pool in which just the top 99 stocks account for 50.09% of total domestic trading volume. In June, the top 20 stocks accounted for 28.94% of all domestic volume, an increase of 2.2% over May's 26.7% and a record. The top 978 names represented 90.01% of total domestic volume, while the remaining 17,597 accounted for just 10% of all dollars traded. Of this, the bottom 12,112 stocks represented less than 0.05% of daily domestic volume.

The national debt will reach 62 percent of gross domestic product (GDP) by the end of this year, the nonpartisan Congressional Budget Office (CBO) said Wednesday. The budget office said the debt will reach its highest percentage of GDP since the end of World War II. The jump is driven by lower tax revenues and higher federal spending in the recent recession. By contrast, GDP has averaged "a little above" 36 percent per year over the past 40 years.

Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords. For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office has predicted that the final bill could reach $389 billion.

European leaders meet in Brussels amid growing fears that Spain, Europe's fifth-largest economy, is preparing to ask for a bailout which would dwarf the €110bn (£90bn) rescue plan for Greece. The Spanish government dismissed reports that it was already in discussions with the European Commission, International Monetary Fund and the US Treasury for a rescue package worth up to €250bn. Officials in Madrid, Brussels and Paris were forced to deny that a Spanish bailout - which would take the European debt and euro crisis into a potentially dangerous new phase - was on the Brussels summit agenda.

Don and Perry were guest hosts on the nationally syndicated Mike Siegel Show. They discussed the ongoing credit crisis in the EU, including the bailout that Spain still says they do not need (but will readily except). 

Strategic asset allocation has a powerful hold on people.  Investors seem completely willing to forgive and forget all of the problems with it–apparently no matter how much pain or harm it caused. Investors who had dutifully spread their eggs among multiple baskets and stayed the course, a.k.a. buy and hold, watched helplessly from the sidelines as their retirement accounts lost a collective $2.8 trillion between the market peak in October 2007 and the trough in March 2009, the Center for Retirement Research at Boston College reports.

The market jitters afflicting countries along the euro-zone’s fringe appear to be starting to rattle even so-called “core” countries like France, Germany and the Netherlands.On Friday, rumors about losses at French banks and comparisons of Hungary to Greece hammered stock markets after early gains. A worse-than-expected picture of U.S. job growth didn’t help. The derivatives market, however, gave off some worrying signals. While the cost of insuring against Greek, Portuguese, Hungarian, Irish, Italian and Spanish defaults jumped, similar costs for France and even Germany – an economy likely to expand 3% to 4% this quarter – also jumped.

Seth Klarman is worth listening to, especially when markets go mad. Mr. Klarman is president of the Baupost Group, an investment firm in Boston that manages $22 billion. His three private partnerships have returned an annual average of around 19% since inception in 1983—and nearly 17% annually over the past decade, as stocks went nowhere. But the professorial Mr. Klarman speaks in public about as often as the Himalayan yeti. In a recent letter to his clients, when he compared the financial markets to a Hostess Twinkie. "There is no nutritional value," he said. "There is nothing natural in the markets. Everything is being manipulated by the government."

Greece is considering taking legal action against U.S. investment banks that might have contributed to the country’s debt crisis, Prime Minister George Papandreou said. “Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.”

Here is the naked truth: capital markets are designed to reallocate money from dumb people to smart people.  If that weren’t true, smart people wouldn’t play.  Smart people don’t play unless they have a probability of winning.  For example, smart people don’t tend to play the lottery.  (If you have ever wondered why the PowerBall winner is always a nitwit and flat broke again in three years, now you know.)  Although the first sentence of this article is for shock value, the naked truth is actually quite comforting.

U.S. stocks tumbled the most in a year on concern that Europe’s debt crisis will halt the global recovery. The selloff erased $1.25 trillion in market value as the Dow Jones Industrial Average fell almost 1,000 points, its biggest intraday loss since 1987, before paring losses. The Dow average ended the session down 347.8 points, or 3.2 percent, at 10,520.32 at the 4 p.m. close of trading in New York. The Standard & Poor’s 500 Index fell as much as 8.6 percent, its biggest plunge since December 2008, before trimming declines to end at 1,128.15, down 3.2 percent. It was the biggest drop since April 20, 2009, for both measures.

In his speech and in a two-part article he is co-authoring in the CFA Institute’s March/April 2010 Financial Analysts Journal (along with Morningstar/Ibbotson’s James Xiong, Tom Idzorek, and Peng Chen), Roger G. Ibbotson revisits the Brinson-Hood-Bebower contention that asset allocation accounts for 90% of a portfolio’s return, arguing instead that the sources of variation of returns from a portfolio are around 75% from the overall market, with the remainder about equally split from portfolio-specific asset allocation policies and from individual securities in the portfolio, along with the timing of trades, and fees.

Tom Dorsey began his financial career as a stockbroker at Merrill Lynch Pierce Fenner & Smith in 1974 and then was offered the opportunity to manage the Options Strategy Department at Wheat, First Securities. In January 1987, he left Wheat, First Securities to start Dorsey, Wright & Associates as an outsourced Options Strategy firm. After the crash, Dorsey realized that the Options business would never be the same. He changed the company’s focus from an options strategy firm to an equity research company, primarily because any option strategy first begins with researching the underlying stock. Today the company employees 16 people with clients spanning the globe in addition to managing over $700 million in assets through Separately Managed Accounts, Annuities, Mutual Funds, and Exchange Traded Funds (ETFs). Mr. Dorsey has 34 years of experience in the financial services business and is the author of numerous books on the Point & Figure methodology as well as motivational books. Mr. Dorsey is an award winning speaker having taught the Point & Figure methodology throughout the world.

Goldman Sachs Group Inc was charged with fraud on Friday by U.S. securities regulators in the structuring and marketing of a debt product tied to subprime mortgages. The Securities and Exchange Commission lawsuit alleges that Paulson & Co, a major hedge fund run by the billionaire John Paulson, worked with Goldman in creating the collateralized debt obligation, and stood to benefit as its value fell, costing investors more than $1 billion.

Emerging markets, because of their characteristics, should matter a great deal to investors today. Investors handicap themselves by limiting how much they invest in emerging markets.The differences that justified the segregation of emerging and developed markets have disappeared or are in the process of disappearing.

No investor will ever admit to a desire to buy losers in the stock market but when their behavior is examined, that is exactly what they do. This seems to be a very strange behavior for thoughtful and careful investors who are making investment decisions that will affect their financial well-being.

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security. This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

Walk into any big-box store in the country and you’d be forgiven for thinking that nothing is made in America anymore. Yet even as countless U.S. companies have moved production to other countries, American factories continue to churn out hundreds of billions of dollars worth of goods annually — everything from Ford trucks and Boeing airplanes to Gordon & Smith surfboards and Viking appliances.

In recent months, you've probably heard a lot about the benefits of converting traditional pre-tax individual retirement accounts into Roth IRAs. But here's something you may not have heard: Many taxpayers should run, not walk, from a Roth conversion. We will tell you why.

Even as many Americans are still struggling to recover from the country's worst economic downturn since the Great Depression, another crisis - one that will be even worse than the current one - is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

January mass layoffs edge up on weak manufacturing data.

MPT (standard asset allocation modeling) is largely dependent on normal distribution. Market returns are assumed to cluster in the center of the bell curve while the infrequent big changes dot the outer edges. All price changes are independent of each other, there are no trends. The market is efficient, everything that can be known about a given security is reflected in its current price. You can control your risk exposure with proper diversification. We do not believe any of these things are true, but there are other strategies that can clear these things up.

Unemployment may have dropped below 10% last month, but the number only looks good in a vacuum. The Bureau of Labor Statistics , the bearer of much of the federal government’s bad news over the last two years, said that the number of jobs open in America dropped to 2.5 million in December. That was a sharp decline from 3.2 million in the same month of 2008. The BLS reported that “Over the 12 months ending in December, hires totaled 49.4 million and separations totaled 53.6 million, yielding a net employment loss of 4.2 million.”

After cutting taxes for 95% of working families in his first year, President Obama has proposed a budget that would raise taxes on 100% of them. Even as the White House calls for another quick shot of stimulus to speed up job creation, its new 10-year budget promises to impose a fiscal regimen of major tax hikes and modest spending curbs.

Since the start of the recession two years ago, corporate and consumer balance sheets have been engaged in a forced bout of cutbacks that figure prominently in fourth-quarter earnings reports coming out now. The signs are everywhere. General Electric Co.'s chief financial officer on Friday referred to the "focused shrinkage" of its financial unit. A day earlier, Target Corp. said it plans to test stores that will have 50% fewer items.

Are bonds the next bubble?

Investors poured money into bonds and bond funds last year in search of safety and higher returns. Now the bond advantage is shrinking as risks are rising. "It has a bubble look to it," says Thomas Atteberry, the manager of FPA New Income, one of the largest independent bond funds.

Mr. Ken Gronbach is an expert demographer, futurist and generational markete.  Gronbach has founded 2 advertising agencies in his lifetime.

It is one of the bleakest new years that states have seen in over a decade.

The Federal Deposit Insurance Corp., overseeing the dissolution of failed banks at the fastest pace in 17 years, boosted its 2010 budget 56 percent to $4 billion to manage further shutdowns. The additional 1,643 FDIC staff will include 1,559 temporary workers and 84 permanent employees, with a majority of positions added to the division that handles bank failures.

 
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Don't tax you, don't tax me, tax that fellow behind the tree." Those famous words were spoken more than 30 years ago by the late Louisiana Sen. Russel B. Long when Congress was looking for ways to raise revenue. Some members of Congress believe they've found the fellow behind the tree: the Wall Street "speculator."

 
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We will review what San Francisco Fed President Janet L. Yellen has to say about how things are shaping up. The big issue is how strong the upturn will be. With such enormous reservoirs of slack in the form of high unemployment and idle productive capacity, we need a strong rebound to put unemployed people back to work and get underutilized factories, offices, and stores humming again.

80% of the top US economists believe that the recession is over. Is it time to send up a cheer or stay hunkered down? What will the recovery look like, when will the jobs be back and when does consumer spending kick in?

80% of the top US economists believe that the recession is over. Is it time to send up a cheer or stay hunkered down? What will the recovery look like, when will the jobs be back and when does consumer spending kick in?

This is shaping up to be a great time for US consumers, America is on sale. With companies competing for every dollar of income, the consumer is the big winner.

This inevitable shift in consumer spending is going to make it tougher for the very people who need the savings to get the funds put away. How is your retirement plan looking?

It has been a year since the credit meltdown and the collapse of investment banker, Lehman Brothers. The question remains about whether cronyism kept their competitors alive of if the likes of Goldman Sachs should have been allowed to face bankruptcy court, too.

Here in the United States we are debating a major change in our health care system and the difficulties of paying for it. We are trying to implement a national policy that most Europeans are trying to unwind due to unmanageable costs.

This week’s poll asked how you are dealing with investment decisions. Market volatility has not gone away. Many issues remain for investors to work their way back to financial health in their personal portfolios and their 401k accounts...

This week’s poll addresses the impact of the current recession on consumer behavior and the willingness of citizens to support state services during an extended recession. Don and Perry will discuss the responses from the radio audience that participated in the poll and what should be expected from local and state government as we work our way through the Great Recession.

Neither President Obama nor his Administration has published any proposed changes to our healthcare system. He has talked a lot and criticized much. However, the only published proposal – HR 3200 -- is from the House of Representatives. A copy is available by clicking on this link.

Here are just some of the discussions you'll hear on this week's show:

During his speech at a National Press Club luncheon, House Judiciary Chairman John Conyers (D-Mich.), questioned the point of lawmakers reading the health care bill.

For the  9th consecutive year Investor Resources, Inc. is in Wealth Manager Magazine among Top Dogs of independent investment advisory firms.

For the  9th consecutive year Investor Resources, Inc. is in Wealth Manager Magazine among Top Dogs of independent investment advisory firms.

Don and Perry will be interviewing Roger Sherrard this weekend. Roger is a local attorney specializing in real estate law and estate planning. We will be discussing pros and cons of various estate planning techniques, the impending change in estate tax law and what actions need to be taken to preserve the most possible ...

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station ...

For the Mackinac Center, Folsom has authored dozens of widely reprinted articles about Michigan's rich and varied past as well as a 1997 book, Empire Builders: How Michigan Entrepreneurs Helped Make America Great.

Prior to the mid-80s, powerful personal computers were not available to let us compare consumer spending data and the historic performance of our economy and determine the predictable nature of either.

Don and Perry will be interviewing Gary Cox, CFA, with Genworth Financial Asset Management. Genworth manages various global investment strategies with a strong focus on preserving capital in difficult markets...

Prior to the mid-80s, powerful personal computers were not available to let us compare consumer spending data and the historic performance of our economy and determine the predictable nature of either...

Using exciting new research developed from years of hands-on business experience, Harry S. Dent, Jr. offers a refreshingly positive and understandable view of the economic future. As a best selling author on economics, Mr. Dent is the developer of The Dent Method - an economic forecasting approach based on changes in demographic trends.

President, Foudy Insurance Agencies, Inc., an employee benefits agency specializing in the sale and service of life insurance, group health insurance as well as related products to small employers in the greater Southern California area.

Our average size client has approximately 40 employees. The products we promote and service include individual and group Life, Medical, Dental, Disability, Long Term Care, MediCare Supplement plans as well as qualified and non-qualified retirement plans.

Don rips into the Chrysler bankruptcy & the results of the listener poll questions on that subject. Followed by a can't miss discussion on the change in taxes and the effect it is having on state financing.

Don delves into current issues concerning the economy and increasing difficulties we have shifting our economic reference from an inflationary to a deflationary environment. Reality has been changing. It is hard for us to change our attitudes.

This past week protesters in cities throughout America participated in the "New American Tea Party", speaking out against what they considered to be unfair taxation.

The trend for countries around the world is to slash corporate tax rates to spur economic growth, yet Washington has yet to come to grips with this financial reality...

Maybe Jay Leno should host Meet the Press. Bowling and canine questions aside, Leno pressed President Barack Obama hard on the House’s vote to strip AIG employees of their retention bonuses via the tax code...